Nursing Home Residents’ Rights Protected by New Rule Removing Arbitration

Nursing Home Residents’ Rights Protected by New Rule

Residents of nursing homes tend to consist of some of the most vulnerable members of society. From elder care to mental health or severe permanent or physical disability, as of 2014 nearly 1.3 million Americans were residing in certified nursing facilities. Until recently, when signing the initial contracts with their individual facilities, nursing home residents were forced to agree that any disputes with the facility would be raised via a process called binding arbitration instead of as a traditional lawsuit in the appropriate court or other venue.

On Wednesday, the Center for Medicare & Medical Services (CMS), the division of the U.S. Department of Health and Human Services responsible for overseeing long-term care facilities, announced a new rule prohibiting the use of binding arbitration as a method for resolving nursing home residents’ disputes with their facilities. While the new rule is not retroactive, meaning it doesn’t apply to existing contracts, going forward, residents and their families will have the ability to sue their nursing homes for injuries, lack of care and other serious legal complaints.

What is Binding Arbitration?

Arbitration refers to a form of alternative dispute resolution that allows parties to resolve their differences before a neutral third party, or arbitrator. Binding arbitration means that the parties agree to give up their legal rights and remedies, such as filing a lawsuit, and instead be bound by the decision of the arbitrator. Binding arbitration clauses are often found in contracts that are signed well before any dispute arises, limiting the choices of an aggrieved party in the event that the other party breaches, or violates the contract.

Businesses, including nursing homes, love binding arbitration clauses. They argue that it reduces litigation costs and limits the ability of consumers to bring class action lawsuits. Big businesses claim this is a good outcome for consumers since it lowers the business’s overhead, reducing overall costs. But the real reason business like nursing homes love arbitration is because they get to skip the jury and go with someone who gets paid by these companies to side with them. The jury process allows everyday citizens to examine the facts of a case and reach a fair decision based on their “enlightened conscience.” Arbitration skips that part. It gives the decision making power to one person who has seen other cases like the one he now has in front of him and he knows that if he wants to keep seeing cases he ought to side more closely with the business. Arbitration often isn’t fair; it certainly is not as fair as the jury system. Let’s take a closer look.

How Does this Change Help Nursing Home Residents?

In reality, binding arbitration often has a negative impact on the person bringing the claim. As a recent NPR article points out, in 2009 the American Health Care Association commissioned a study which found that the average awards after arbitration were 35% lower than if the plaintiff had gone to court. Numerous recent articles and studies have pointed to the fact that arbitrators often have business or other professional relationships which can cloud their independent legal judgement during arbitration proceedings.

This new rule enacted by CMS, resolves the conundrum most nursing home residents face; where they are forced to choose between forfeiting their legal rights and getting adequate medical care. As a policy issue, the new rule makes sense. A typical nursing home client signs a contract at the most medically vulnerable point of their life. Unable to independently care for their daily needs, nursing home residents are confronted with the untenable choice of pitting healthcare against protecting their basic legal rights.

As pointed out by Senator Patrick Leahy of Vermont, it is against the public interest to support corporations at a point in most Americans lives when they are in “no position to evaluate coercive fine-print terms.” This new rule will bring a welcome sigh of relief to anyone engaging the services of a long-term care facility in the future.

Our firm handles nursing home abuse cases and fights arbitration clauses that patients are sometimes forced into signing. If you have a loved one who has suffered an injury in an assisted living facility or nursing home, contact us for a free consultation.